Recovery notices likely to two EV companies over FAME sops

New Delhi: The Centre is likely to issue recovery notices to Hero Electric and Okinawa after a probe concluded the two companies violated the provisions of the FAME India scheme, said people with knowledge of the matter.

The probe found the EV two-wheeler firms breached the localisation programme they had committed to, said the people. The recovery notices will seek to claw back the subsidy amount disbursed under the FAME II scheme, they said.

Hero Electric and Okinawa denied they had violated FAME II provisions.
A probe into the implementation of the ₹10,000-crore FAME II scheme was initiated last year after 12 EV two-wheeler makers were accused of falsifying localisation claims and wrongly claiming subsidy. Payments were also stopped to the companies. This move was a jolt to the original equipment manufacturers (OEMs) as FAME II helped them sell EVs at lower prices.

Subsidy under FAME II was meant to incentivise EV companies to use more locally manufactured components and reduce import dependence. To meet this, OEMs had committed to a phased manufacturing programme (PMP) and linked subsidy disbursals to it.

“The probe has concluded this week and recovery notices will be issued to companies that have been found to be non-compliant,” a senior government official told ET on condition of anonymity, adding that steps will be taken to de-register errant firms from the scheme.

Officials said the probe against Hero Electric, Okinawa, Okaya EV and Kinetic Green has been completed.”In respect of Hero Electric and Okinawa, the report found rampant use of imported parts, which is a clear violation of PMP guidelines,” the official said.

The official also said that no violations of PMP norms have been found against Okaya EV and Kinetic Green. “The ministry is taking steps to release the subsidy amount withheld in respect of these two OEMs. It is likely that inquiry reports on the remaining manufacturers will be submitted by the test agencies within two weeks,” said the official.

Okinawa MD Jeetender Sharma told ET, “We have always adhered to policies. In fact, Okinawa was the first company in the industry to receive a FAME II certification in 2019. We have not been informed about any such action of reversing subsidies.”

Sharma further said, “We have submitted documents to the relevant departments and have been supporting them at every step as and when required. We are also in constant dialogues with the government to resolve the issue and we hope to have a resolution soon.”

A Hero Electric spokesperson said, “This is not true; the company hasn’t got any information on this. In fact, Hero Electric along with 13 other OEMs are in discussions on reimbursement of subsidy already passed on to customers for the last 16 months and also continuation of subsidy beyond FAME II so as to bring down the ‘on road price’ of E2Ws … and we hope for an early resolution.”

The spokesperson added, “Questions of claw back do not arise since there was no payment of subsidies made in the first place. And it is unlikely that the departments will want to suggest that subsidies passed on to customers will be recovered from them in a ‘recall’.”


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